The dramatic decline in ocean containing shipping rates picked up steam last week, and are poised to soon fall below a key psychology level.
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| Some experts are saying more dramatic cuts in ship sailings will be needed to stem the rate collapse. |
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According to the Freightos Freight Index at the end of last week, the spot rate to ship a 40-foot container from China to the US West Coast was just $2361, down another 20% from the previous week, as spot rates are in freefall, cut in half over the past four weeks.
Just one year ago, the premium rate for the same move was more like $20,000, with about two-thirds of that decline since May.
Ships are reported to be leaving Asia for the US West Coast barely three-quarters full, despite many voided sailings by carriers, and spot rates are on track to fall through the psychologically important $2,000 level as early as this week.
According the theLoadstar.com web site, carriers are on the verge of cancelling even more sailings.
Meanwhile, importers are sitting on contract rates some four times higher than the spot market and are said to be receiving ‘temporary’ rate reductions from carriers. loadstar.com.
TheLoadstar quotes Peter Sand, chief analyst at research firm Xeneta, as characterizing the rates collapse on moved to ports such as Las Angeles “dramatic”.
“It really is an eye-catching development,” Sand added. “Shippers that have had their backs against the wall in negotiations for so long are seeing the market turn much quicker than many anticipated. They can now move three 40-foot containers for the price they paid for just one only a few months ago.
Rates from China to northern Europe are down too but not nearly as much. Spot rates on those lanes have fallen 70% in the past year, but are still 50% higher than in October 2020. Hoever, container volumes are said to be falling rapidly.
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Some experts are saying more dramatic cuts in ship sailings will be needed to stem the rate collapse.
Meanwhile, importers are sitting on contract rates some four times higher than the spot market and are said to be receiving ‘temporary’ rate reductions from carriers, according to theLoadstar.com
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